How the New FinCEN Rule Could Impact Your Next Closing
What Is the New FinCEN Residential Real Estate Rule?
The Financial Crimes Enforcement Network (FinCEN) has finalized a Residential Real Estate Rule (often called the “RRE Rule”) that becomes effective for closings on or after March 1, 2026. The rule is designed to combat money laundering by increasing transparency in all‑cash residential real estate transfers across the United States.
In simple terms, certain professionals involved in closings and settlements must file a “Real Estate Report” with FinCEN for covered transactions. This rule replaces and expands prior Geographic Targeting Orders (GTOs) that applied only in specific markets and makes similar reporting requirements permanent and nationwide.
Which Residential Transactions Are Covered?
A transaction is generally reportable if it meets all three of these conditions:
- Residential property: 1–4 unit homes, condos, co‑ops, and vacant land where the buyer intends to build 1–4 residential units.
- Non‑financed / all‑cash: No loan from a financial institution that is subject to federal Anti‑Money Laundering (AML) and Suspicious Activity Report (SAR) rules and secured by the property.
- Buyer is an entity or trust: The transferee is a corporation, LLC, partnership, or trust, subject to certain exemptions.
When those criteria are met and no regulatory exemption applies, the closing or settlement professional must submit a Real Estate Report to FinCEN with details about the property, the transaction, the entity or trust, and its beneficial owners.
What This Means for Real Estate Investors
For real estate investors who buy residential properties in all‑cash through LLCs, corporations, partnerships, or trusts, this rule adds a new layer of disclosure and planning.
Key implications for investors:
- Less anonymity in entity purchases
All‑cash purchases through entities or trusts will require disclosure of “beneficial owners” behind those structures, similar in spirit to the Corporate Transparency Act. Investors who historically relied on layered entities or trusts for anonymity should expect increased transparency. - More documentation at closing
Investors should be prepared to provide information about ownership interests, control persons, and funding sources so the settlement/closing agent can complete the Real Estate Report accurately and on time. Having KYC‑style documentation ready early can help avoid last‑minute closing delays. - Potential closing delays if unprepared
If beneficial ownership details are incomplete or complex, settlement professionals may pause a closing until they can gather the required information. Investors using multi‑layered structures, foreign entities, or complex trusts should work with their advisors ahead of time to streamline documentation. - Alignment with broader AML trends
The RRE Rule works alongside other federal transparency initiatives and brings residential all‑cash deals closer to bank‑style AML and KYC expectations. Investors who modernize their compliance practices now will be better positioned as future rules evolve.
What This Means for Real Estate Agents and Settlement Professionals
FinCEN’s rule places primary reporting responsibility on “reporting persons,” typically the professionals performing closing or settlement functions such as title and escrow companies, attorneys handling settlements, and in some cases other closing agents. While real estate agents are not always the filer, they will be deeply involved in gathering information and educating clients.
